Praj Industries has decided to increase its authorised share capital from Rs 4.5 crore to Rs 9 crore. It has also decided to set up a 100 per cent subsidiary in Europe as well as go in for external commercial borrowing of $2 mn.
"The company may go in for a foreign equity partner or issue fresh capital to investors in the domestic market, but we are yet to decide on this issue," said Pramod Chaudhari, chairman and managing director, Praj Industries.
The company's share capital is being hiked mainly to meet the expansion needs of the company as it has formed a new dairy, food, bio-pharma and healthcare division. The increased capital will also help the company to reduce its high interest costs and fund expansion plans like setting up of a new manufacturing facility.
The AGMof shareholders held in Pune yesterday approved both the proposals of the company's board of directors - the share capital hike and the setting up of a subsidiary in Europe.
The ECB route will help the company to retire its costly debt. At present, the company pays around Rs 1.88 crore as interest costs annually. It also plans to go in for non-convertible debentures for Rs 3.5 crore. Praj is negotiating with ICICI for the NCDs.
Addressing the AGM, Chaudhari said: "Although it has not been a very encouraging year for capital goods manufacturers, with a lot of companies reporting negative results, Praj seems to have done respectably well."
Exploration of new markets, he said, has convinced them that international business is the key to Praj's future growth. It has initiated an intensive marketing programme which covers regions in Eastern Europe, South America, Russia and the CIS countries.
Now the company is looking for new overseas markets like Vietnam and Australia. Over 40 per cent of Praj's turnover comes from exports.
Praj has entered into a technical tie-up with Drytex of the UK for drying systems and HRS of the US for specialised heat transfer systems. For the six-month period ending September 1997, Chaudhari said the company is close to achieving a turnover of Rs 30 crore as against Rs 24 crore achieved in the corresponding period of the previous year.
